Ministers told spending on projects including climate change schemes for
wealthy countries could undermine public support for overseas aid

Ministers have been ordered to stop squandering British aid on wasteful projects, including climate change schemes in wealthy countries, the Telegraph has learnt.

Justine Greening, the development secretary, fears Whitehall departments, in particular the Department for Energy and Climate Change, could undermine public support for overseas aid by funding poorly-run projects in middle-income countries that do not need help from British taxpayers.

In a letter seen by the Telegraph, Mrs Greening warns ministers they risk breaching international protocols and face investigation by Britain's aid watchdog if they spend continue to spend money on anything other than relieving extreme poverty in the world’s poorest regions.

Mrs Greening fully supports the Government’s target of spending 0.7 per cent of GDP on foreign aid. But the warning that some departments are may be misusing aid will bolster Conservative MPs who want David Cameron to divert some of the £8bn a year aid budget on flood relief in Britain.

Mrs Greening’s department, which accounts for the lion’s share of aid spending, has stripped funds from more than a dozen rapidly growing countries and has been swift to shut down programmes that misspent funds. She wants private sector firms such as supermarkets to work with her department to help developing economies come off aid and stand on their own feet.

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Mrs Greening did not single out any departments in the letter, which was sent to every member of the Cabinet.

However, she is understood to be particularly frustrated at Liberal Democrat Ed Davey's energy and climate change department, which oversees hundreds of millions of pounds of grants designed to help poor and middle-income countries curb their carbon emissions.

It recently gave £15m to cattle ranchers in Colombia, the world’s 30th richest country, to help cut flatulence in cows. It has also funded projects in Turkey and Chile, which are enjoying rapid economic growth.

Ms Greening has also faced hostile questions in the Commons over the EU aid budget, which has been spent in countries including Belarus, a dictatorship. Britain is a major donor to EuropeAid but the Department for International Development (DfID) insists it is the job of the Foreign Office to negotiate the budget.

The letter, which was sent on December 23, was copied to the Prime Minister and Nick Clegg and passed to the Telegraph from a source outside of DfID.

In it she thanked Cabinet colleagues for helping to meet the 0.7 per cent aid target, before pointing out that her department has cut aid spending from 43 countries to 28, including ending support to Russia and China.

Aid must strictly go on poverty reduction in “low income countries rather than those that can pay for their own development,” she said.

She warned her colleagues that aid spending must meet the strict criteria of the OECD, the global club of developed countries. Departments that fund wasteful projects money face investigation by the Independent Commission on Aid Impact, Britain’s aid watchdog.

She wrote: “We are making sure spending is targeted to where it is needed the most.

"British taxpayers rightly expect all overseas development aid, irrespective of the spending department, to be high quality and well targeted.

“All departments need to make sure they are delivering this and show they are meeting the OECD eligibility criteria.

“As non-DfID overseas development assistance grows, the Independent Commission on Aid Impact will increasingly scrutinise spending outside of DfID by other government departments.”

The intervention comes as some departments attempt to protect their pet projects from Treasury cuts by relabelling them as overseas assistance and “tucking under” the ring-fenced foreign aid budget.

As such, the letter has been interpreted in Whitehall as a shot across the bows of ministers ahead of the next spending review, which will slice billions more from budgets, warning them not to indulge in clever accounting.

“She is trying to make sure she doesn’t get mud on her face because of reclassification,” one Whitehall source suggested.

The UK in 2012 spent £8.62bn in overseas development assistance. Some 87 per cent, or £7.53bn, was spent by Mrs Greening’s department.

The rest was spent by bodies which include the Foreign Office (£268m), the Department of Energy and Climate Change (£241m) and the UN and other global agencies (£107m).

The Department of Health, the Department for Work and Pensions, the Home Office and the Department for Culture, Media and Sport also have aid budgets running to tens of millions of pounds. The DWP’s aid goes to the International Labour Organisation, which promotes workers’ rights, while the health department’s share goes to the World Health Organisation.

Mrs Greening has asked her officials to work with departments including the Foreign Office, Defra and HMRC to “provide best practice advice”, the letter said.

Neil Parish, the Conservative MP for Tiverton and Honiton in Devon, last week said some foreign aid is wasted and said it should be spent on rebuilding railways and coastal defences in flooded areas. “We’ve got to make sure we look after our own at this stage,” he said.

Ian Liddell Grainger, a Tory whose Bridgwater constituency includes the Somerset Levels, added: “We send money all over the world. Now we need to give people down here the hope that they will get what they need.”

A DECC spokesperson said: “Around two thirds of greenhouse gas emissions are forecast to come from the developing world by 2020, so it is key to help those countries switch to renewables like wind and solar, and so stop climate change that could impact us all through extreme weather.”

Where the money goes:

Department for Culture Media and Sport

Program to make PE lessons more “meaningful and exciting” in 20 countries including Malaysia, South Africa, Brazil and Turkey, following London 2012 Olympics.

Cost: £8.35m over four years

Department of Energy and Climate Change

Program to reduce “greenhouse gas emissions from cattle ranching” in Colombia.